Why you may need IT contractors insurance
Many professionals and companies may never have even considered what professional indemnity insurance means, while others may have heard of it but never bothered looking into the subject. But it is typically available through conventional IT contractors insurance packages, and in some circumstances may save a business or individual hundreds of thousands of pounds or more.
Professional indemnity insurance may provide cover as part of a general IT contractors insurance deal, and in some circumstances might be referred to as business insurance, or, as part of a business insurance package.
Normally it may protect against claims for loss or damage by a third party or a client and relates to mistakes, real or perceived, made by you in the conduct of your business.
The deal may sometimes apply to one individual person, ie one freelance IT professional, or a company as a whole.
Often a deal may protect against legal claims that you have made a mistake, committed an act of negligence, or a general error in your work. For example, you may incorrectly install a software system which needs to be redone, costing a client money. In such circumstances they may decide to take legal action to recover any money they have lost.
In the past professional indemnity insurance used to be mainly associated with the likes of architects, doctors, and accountants. This was because some of them need to have it in place in order to qualify for membership of trade associations, or to abide by the law.
But it has become popular with other trades, specifically because of a heightened legal awareness which means clients may be more likely to sue if they feel they have been wronged.
IT contractors insurance comes with a policy payout limit, beyond which it may not pay for any more legal fees or compensation costs. Often selecting this limit is important, as if it is too low you may end up under-insured in the middle of a court case and have to pick up the rest of the bill yourself. On the other hand, if you end up over insured, you may be paying for a level of IT insurance protection you don’t really need.